Application for Certificate of Authority - Captive Insurance Companies

This information is designed to assist individuals in preparing the application pursuant to A.C.A §23-63-1061 et seq. and Rule 73.   Please provide the following information in the order requested herein.  Please include a table of contents for the packet and tab each of these items with the listed numbers.  For any items not applicable, please include a page in the packet; numbered accordingly, explaining the reason the item is not included.

 Submit one (1) original and (1) copy of the application package. If the signature of any person is affixed pursuant to a power of attorney, a copy of the power of attorney shall also be filed with the application.

 In order for a submission to be considered a complete application, all required information must be included in the filing.

A letter of Authorization is required for anyone other than company personnel, designating the named individual(s) representing the applicant.

The application filing fee is $200 per Rule 73§18.  If approved, AID will request a $300.00 fee for the issuance of the original certificate of authority.  All checks should be made out to the Arkansas Insurance Department Trust Fund.

The completed application package and any questions concerning the application should be directed to:

Arkansas Insurance Department/Legal Division

1200 West Third Street, Little Rock, AR 72201-1904

501-371-2680        fax 501-371-2747    insurance.legal@arkansas.gov

Website:  https://insurance.arkansas.gov/pages/industry-regulation/finance/captive-insurance-companies/

 1.  Please include the following information with this Application:

 a.  An explanation of insurance coverage/limits/reinsurance. Form

 b.  A certified copy of the captive charter, certificate of incorporation, articles of incorporation and bylaws or, if being formed as a reciprocal, a certified copy of the power of attorney-in-fact and subscription agreement. Certified copies of these documents must be filed before a license is issued.

 c.  A non-refundable fee of $200.

 d. A feasibility study prepared by a qualified, independent actuary.

 e.  Statement of public benefit to State of Arkansas, to be certified by the Commissioner of Insurance.

f.  Biographical affidavits for all officers and directors.

g.  If applicant is an Association Captive, please give history, purpose, size and other details of parent association.

h.  List all other providers and their responsibilities together with how fees for services rendered are to be charged.

i.   If applicant is to be formed as a Reciprocal Captive, applicant must provide, for the Commissioner's approval, its coverages, deductibles, coverage limits, and rates.

j.   If applicant is a Sponsored Captive, applicant must provide all contracts between the Sponsored Captive and any of its participants.

k. Statement under oath of its president and secretary, or attorney if formed as a reciprocal, showing its financial condition.

l.  An applicant producer reinsurance captive or sponsored captive shall also file:

    (1)   A business plan demonstrating how the applicant will account for the loss and expense experience of each protected cell at a level of detail found to be sufficient by the Commissioner, and how it will report the experience to the Commissioner;       

    (2)   A statement acknowledging that all financial records of the captive insurance company, including records pertaining to any protected cells, must be made available for inspection or examination by the Commissioner; and

    (3)   Evidence that expenses will be allocated to each protected cell in an equitable manner.

m.    A detailed Plan of Operation with supporting data including:

   (1) Risks to be insured- direct, assumed, and ceded- by line of business;

   (2) Fronting company if operating as a reinsurer;    

   (3) Expected net annual premium income;

   (4) Maximum retained risk (per loss and annual aggregate);

   (5) Rating program;

   (6) Reinsurance program;

   (7) Organization and responsibility for loss prevention and safety including the   main procedures followed and steps taken to deal with events prior to possible claims;

   (8) Loss experience for past three years (if applicable) together with projections for the ensuing three years;

   (9) Organizational chart; and

  (10) Financial projections on an expected and worse case scenario, certified by the president and secretary of the applicant. 

 Items (a) through (m) above should be submitted in a three-ring notebook with numbered and lettered tabs [i.e., A.1(a), A.1(b)] with the required information immediately following each tab. Items 1, 3, 4, and 10 above should be projected for a three-year period. NOTE: Prepare one extra copy of all documents required by this application.

 n.  Annual Report of Parent.

 o. 10K or Personal Financial Statements of Owners.